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Free trade agreements |
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Free trade agreements signed by GCC states with countries and economic blocks help reduce inflation and price hikes since they lead to waiving of customs duties and allow smooth flow of commodities and services. For example, the GCC countries signed a free trade agreement with European Free Trade Association, which includes countries with global economic and commercial status such as Switzerland, Liechtenstein, Norway and Iceland. These four countries, despite their small economies, may be more proactive than European Union countries, which are still hesitant in signing a free trade agreement with GCC countries. Similarly, Gulf countries concluded free trade agreement talks with Singapore earlier this year, and made great strides in signing similar agreements with countries such as China, India, Pakistan, Japan, Turkey, Australia and New Zealand, which are the main trade partners of GCC countries. Similar talks are expected to begin soon for setting up free trade zones with Iran and South Korea. This is a major shift in the policy of GCC countries' foreign trade, which will contribute to enhancing the position of GCC countries in international trade, and turning them into a main hub for East-West trade, especially after the UAE and Saudi Arabia were ranked among the 30 biggest importers and exporters by the World Trade Organisation (WTO). The economic outcome of this pattern is significant as the nations sought by GCC countries to sign free trade agreements account for more than 80 per cent of their foreign trade. This means waiving of customs duties on commodities imported from these countries, estimated at five per cent, which would eventually lead to stability of prices and help reduce inflation rates. This will also lead to GCC exports to these countries being exempted from customs duties, which are currently entailing high rates. This would fuel the competitiveness of GCC products in global markets. Such inclination is in line with the globalisation age and the liberalisation of markets called for by the WTO, in which most of the GCC countries have become members. GCC countries will also have more flexibility in negotiation and dealing with their partners to liberalise the service sectors in the next round of free trade talks in Doha. It is quite strange that other Arab countries were not responsive to the efforts of GCC countries regarding free trade agreements. The 2002 Arab Free Trade Zone agreement is still ink on paper, while bilateral agreements have not had any real results. The delay in arriving at agreement on free trade zones between the Gulf countries and other Arab countries will have a negative impact on the commercial exchange between these countries and deprive Arab and GCC commodities any competitive edge in the regional markets. It is important to keep pace with rapid economic and commercial changes to develop regional trade, yet this requires a true understanding of these changes. High customs duties and adopting rules from the 1960s by some Arab countries will never lead to developing commercial exchange within free trade agreements.
The
experiment of such agreements can be of benefit to the rest of the regional
economies, as well as to some countries and economic groups such as the European
Union, which has lost its position as the leading partner of GCC countries owing
to obstacles in the way of signing a free trade agreement. However, it is
expected to be signed by the end of this year. Ref link: http://www.gulfnews.com/business/Comment_and_Analysis/10209678.html |